U.S. companies, consumers feeling fallout of Trump’s trade war with Canada

Congressman Roger Marshall meets with Mike Bergmeier, right, owner of Shield Ag Equipment, to discuss the impact of the steel and aluminum tariffs.

courtesy Congressman Roger Marshall

Mike Bergmeier voted for Donald Trump. He likes the President’s promise to bring manufacturing jobs back to the United States. And he agrees that the country has to overhaul trade deals to make that happen.

But Mr. Trump’s attempts at doing this are taking a bite out of Mr. Bergmeier’s own business, building parts for farm machinery at a plant in Hutchinson, Kan. Mr. Bergmeier sources specialty steel for one of his plow blades from a mill in Selkirk, Man. That metal is now subject to the 25-per-cent tariff the President imposed on Canadian steel last month.

“I am a Trump supporter. But politicians sometimes don’t get the law of unintended consequences,” Mr. Bergmeier, owner of Shield Agricultural Equipment, said in an interview. “Canadians are some of our best trading partners … We need Canada.”

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Mr. Trump’s trade war has damaged the U.S.’s allies and enemies alike, making it harder to sell into the world’s largest consumer market. But it has also backfired by side-swiping Americans themselves: Across the U.S., companies are taking hits to their bottom lines, jacking up prices for consumers and, in some cases, laying off workers. The injury is being felt by companies large and small, from corporate behemoths such as Coca-Cola and the Campbell Soup Company to specialized businesses such as Mr. Bergmeier’s.

The numbers alone suggest there are more Americans suffering from the tariffs than benefiting: U.S. manufacturing companies that consume steel, for instance, employ more than 40 times as many people as the steel industry itself. And Canada is hoping to make the pain even more acute with its retaliatory tariffs targeted at key Republican areas of the country, in a bid to get Mr. Trump’s own base to press him to back down.

In one particular irony, some foreign companies face lower tariffs to sell their goods to the U.S. than American companies now do to bring in steel or aluminum.

Mona Shulman, a vice-president at fruit-canning company Pacific Coast Producers, said Mr. Trump’s tariffs on the steel that goes into her company’s cans gives a leg up to competitors with plants in China and Thailand that export to the U.S.

“The other companies that produce canned fruits and canned tomatoes overseas can import the finished good without paying what we do,” she said from Lodi, Calif.

It’s a similar story for Mid-Continent, one of the last nail manufacturers in the U.S. The Missouri-based firm, which imports steel from a mill owned by its Mexican parent company, has seen a 70-per-cent drop in business since the tariffs started last month, said spokeswoman Elizabeth Heaton. Mid-Continent has already laid off 60 people, Ms. Heaton said, and could be shut down by the end of the summer.

Meanwhile, competitors face significantly less cost to export foreign-made nails to the U.S. Mid-Continent has even taken part in previous complaints to the U.S. Commerce Department about subsidised nails made in China and dumped in the American market – the exact sort of trade practice Mr. Trump is targeting, Ms. Heaton said.

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“Mid-Continent has been fighting for fair trade. And now, in one fell swoop, the administration has given China and other countries the advantage they’ve been trying to get all along,” she said.

For some companies, Mr. Trump’s tariffs have erased gains from the Republicans’ signature tax cut package passed last year.

Ryan Krill, co-founder of Cape May Brewing in New Jersey, had already made plans to invest the savings from a cut to the federal excise tax for brewers into a 20,000-square-foot expansion. Now, the steel tariff will add costs to constructing the expansion and buying more brewing equipment, while the aluminium tariff means more expensive beer cans.

“It’s given us pause,” Mr. Krill said. “Every decision before this was ‘expand.’ ”

Canada’s fightback strategy is to crank up the pressure with tariffs on U.S. companies in politically sensitive places: Whisky from Republican Senate Majority Leader Mitch McConnell’s home state of Kentucky, for instance; soup and ketchup from the perennial swing state of Ohio.

In Hutchinson, at least, there are signs that the Republican bedrock – the county voted 64 per cent for Mr. Trump in 2016 – is starting to turn on the President.

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Mr. Bergmeier has been lobbying Kansas’s members of Congress, and had a telephone call with Commerce Secretary Wilbur Ross. “At church, you hear farmers say ’I voted for Trump – I’m never voting for that guy again,’ ” he said.

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